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Camry Craze: Long America's best-selling car, the newest Camry has cranked things up a notch

August 27, 2006

Dealers are having a hard tmie keeping the redesigned Camry, which was launched in March, on their lots.

LOS ANGELES - The best-selling car in America is hot.

Dealers have a slim 10-day supply of the redesigned 2007 Toyota Camry, which hit dealerships in March. The Georgetown, Ky., plant is running overtime and weekend shifts. Sales executives are begging for the Japanese Camry plant to export more. The car has no incentives.

"Customers are following the car carriers to the dealership," says Toby Hynes, president of Gulf States Toyota, which distributes vehicles to 148 Toyota dealerships. "This is not just selected dealers. It's every dealer in every market that is short of product."

The 2007 redesign gave the Camry more attractive styling, more interior room and more power. A hybrid version is now available. And rising gasoline prices are pushing customers away from trucks and toward cars.

If Toyota's manufacturing plants keep up with demand, there is a strong chance that the Camry could be the first car to top 450,000 sales since the Chevrolet Impala in 1978.

The Camry has been America's best-selling car every year but one since 1997.

Sales, transaction prices up

Since the March launch of the redesigned model, Toyota has sold 205,615 Camrys, including the still-to-be-redesigned Camry Solara coupe, up 3.1 percent from the March-July period of last year, according to the Automotive News Data Center. Sedan sales account for 90 percent of the total.

A 3.1 percent increase is modest, considering redesigns typically boost demand. But dealers say they could sell many more if stock were available. And the average transaction price of the Camry is rising, from $22,378 in April to $22,558 in July, according to the Power Information Network.

Before the redesign, the Camry was a loss-leader for Toyota dealers; dealers ordered them to become eligible for hotter, more profitable models. The cars often sold for below dealer invoice.

"There were years in the not-distant past when you were content to lose a grand a unit on Camry, because you'd make it up on other products," says Fritz Hitchcock, a multiline dealer in Puente Hills, Calif.

"Now we're getting within $500 of sticker, and we can make a buck on them. You'd have to be asleep at the switch not to be selling these."

As Toyota factories rush to fill Camry orders, the launch has encountered a speed bump. Internet chat sites such as Edmunds.com, MSN Autos and Yahoo! Autos list hundreds of customer complaints about 2007 Camry powertrains hesitating under low-speed acceleration. That echoes problems suffered in the launch of last year's redesigned Avalon, which shares many components with the Camry.

In response to these complaints, Toyota has issued several technical service bulletins for the 2007 Camry powertrain, a spokesman said. The bulletins address transmission malfunctions, spiking RPMs and harsh downshifts.

Toyota's success around the world has caused a substantial review of the company's vaunted quality procedures.

"The only reason we are discounting off sticker price is so we can help people get out of a negative equity situation when they finance," Criscuolo says. A customer has negative equity when he owes more on his car loan than the car is worth.

Another Camry advantage is a strong residual value from Automotive Lease Guide, he says. After three years, the Camry retains 62 to 64 percent of its sticker price, depending on the trim level. The residual, the value of a vehicle at the end of a lease, allows Toyota to offer low monthly lease payments.

Mid-sized cars continue to account for more than half of the vehicles traded in to get a Camry. However, SUVs have increased from 13.3 to 15.6 percent of vehicles traded in, according to PIN data. During the March-July period, the Ford Explorer was the fifth-most traded-in vehicle for a Camry, up from eighth in the same period of 2005, the PIN data states.

"We're seeing a lot of SUVs coming in on trades, from Envoys to Explorers and Navigators," Criscuolo said. "They are getting out of domestic SUVs and into our car. Now we're going to retain them."

More stock coming

Some inventory relief will come this fall when the Georgetown plant begins building 48,000 Camry Hybrid models, about one-eighth of Camry production at the plant. That will free up Toyota's Japanese export allocation for more standard Camrys, while the Japanese hybrid plant can concentrate on Prius production.

Next spring the Subaru plant in Indiana will begin building Camrys at a rate of 100,000 units per year. But that will not be incremental production, cautions Toyota manufacturing spokesman Dan Sieger. Those units will be used to decrease the number of Camry exports from Japan.